tv Bloomberg West Bloomberg August 30, 2014 4:00am-5:01am EDT
>> from pier 3 in san francisco, welcome to the best of "bloomberg west," where we focus on technology and the future of business. i'm emily chang. every weekend we'll bring you the "best of west," interviews with the power players in global technology and media companies that are reshaping our world. apple products are getting bigger and smaller. the company will unveil a wearable device on september 9 at an event as well as two
larger iphones. they are also working on larger ipads with a 12.9 inch screen beginning production in the first quarter of next year according to people with knowledge of the matter. with sales of current ipads falling for two straight quarters lrks bigger screens mean bigger sales? i started by asking jean, is bigger indeed better? > it is. >> it is. t is needed. bigger is better. ultimately it is going to open up some new use cases for ipads that we hasn't throuth of whether it is business or education. it is much needed. it has been a little bit slow
on the innovation curve on the ipad. >> what kind of use cases do you see? >> you could argue medical. this deal with apple which was inked about two months ago said they were going to come up with 100 combinations. right now the simple answer is we don't fully know but there are clearly benefits to bigger screens and they will be nailing gap. >> what does this mean for much larger screen size? > it is probably negative in ipad's case. about 25% versus an iphone about 50%. this will probably be slightly negative for overall gross margins. the exact amount if i was going to just guess, it would be
around 20% versus 25% for an existing ipad. >> we have seen apple start with only one screen size for the iphone. only one screen size for the ipad. the ipad now has the ipad mini. potentially we'll be seeing larger phones in a few weeks. do you see a future where you see a family of devices? a family of sizes rather than sticking with just a few? >> absolutely. i think it is funny to look back because we were at a period when miniaturizeation was the big theme. then when iphone came out people were wanting bigger phones. what we have noticed in our survey work is that people are passionate about their screen size. the way i would liken it is to almost like a preference in. when you say a screen size the wrong screen size, people get
kind of upset about that. everyone has a different opinion of what is the right screen size. >> ultimately apple recognizes that and that is what they are doing. >> it is interesting, jean. the way that people attach themselves particularly to apple projects is different than almost anything else in computing. your models are wonderful because you make some strong assumptions about use cases. how do you imagine people will pair a certain sized phone with a certain sized ipad? do you imagine people will go for the biggest iphone and the smallest ipad or pair those device with certain, i don't know, -- >> there has been a surprising dynamic. you would think you would have the opportunity to get a slightly bigger phone. a five or a six inch phone you wouldn't have a tablet necessarily. so far the 5.5 inch phone market that hasn't sold that
well. it is going to be interesting to see how this plays out when apple which has more say in the market, leans in with a product. i think the way this plays out over the next six to 12 months is you're going to see some success with that 5.5 inch tablet. i think that is going to be negative for their existing ipad thrind 12.9 inch size is still going to have some life because that is further enough away from that fablet that it is going to be differentiated >> anything else as the drum beat continues on september 9? >> the big wild card is payments. the next version the iphone has is a chip for payments. trying to figure out exactly what is going to happen in payments is kind of the exciting substory peer here. so far we haven't -- substory here. so far we haven't heard lot
>> welcome back to the best of "bloomberg west." i'm emily chang. amazon is buying twitch tv for roughly $1 billion. twitch is an emerging and powerful media blample 55 million viewers every month watching other people play video games. it is one of the top 15 most trafficed sites in the world. those are numbers that most cable networks have only dream
of. cory johnson and i spoke with "businessweek's" brad stone. and a guest who led an early investment on twitch and is on the company's board. i started by asking could twitch really be the next cable giant? >> it absolutely could be. this is not some fringe activity that people do this their basements removed from society. >> who are these people? >> growing up, think of your teenage years sitting around the living room warming your friends play video games or watching people play together. playing together is something that is universal. twitch has brought that online. it is not so out of the mainstream. i got a lot of quizzical looks too when i first described the concept. >> as we know, they are making
a dozen dralms and comedies. a lot of kids shows. they just green lit five now kids' pilots. hey are spending millions on content like hbo shows. >> let me ask you about -- we have seen some numbers in that extrapolation of 4.5 hours per month per user. i have read that a lot of the users, over 58% spend as much as 20 hours a week. are those kinds of numbers right what happened does that ean? >> there are a lot of users that spend a lot of time watching video game content. if you think about it, it is not so different than what we all do what we watch the world cup. we want to watch great people play games. and we can all be united through that concept. >> and game players learn tricks from other game players. there is an entertainment value that is addicting. from a media standpoint, is what is really curious.
>> there is tons of entertainment and learning value and also marketing value. for the game publishers to show this is what these games do and this is how you play them. >> who are the people posting the content, how did twitch recruit them? >> they have a very diverse amount of broadcasters that stream. everybody from the best in the world to someone who has a funny, entertaining show around a particular type of content. you have a million different broadcasters broadcasting on twitch. >> a lot of the revenue comes through the dedicated players to belong to a certain tream. brad, when you look at amazon's other plans to monetize content because a lot of the work has really about selling stuff, using streaming to sell stuff. using amazon prime to sell stuff. where does this fit with a different model? >> we know amazon is building a
huge ad business now. e-marketers say it will be a $1 billion business in 2014. the thing you notice when you have these devices it is not here because amazon does not use google services. there is no youtube, for example. i think twitch tv brings it kind of up to speed partially in the user-generated space. on a kindle fire tablet. on a fire phone. it gives people another reason to hit up amazon. >> amazon's original shows haven't done so well. it is hard to name even one of them, but the other shows that they are buying, if it is a show that i want to watch, i will find it. who has the power? is it the content creators, is it these upstarts? twitch has only been around for three years. >> it shows you how fast things can change. you tap into a community.
they create all of this content, you very quickly have the power. something that jeff bezos said around why they were making this acquisition is that they want to learn how to do that. i think they want to understand, they are keeping twitch as an independent company. they want to understand how twitch was able to harness this collective energy so quickly. >> broadcasting and watching gameplay is a global phenomenon and twitch is a content that brings together tens of millions of people who watch billions of minutes of games every month. >> they acquire a company really just to get the engineering talent. has amazon done that? > not as much. they have a build it here philosophy. they made a lot of mistakes in the late 1990's. google, we're just seeing that. it is so hamstrung in trying to make acquisitions. they are under the microscope. >> didn't they try to buy
twitch and it didn't work out? what happened there? >> i cannot comment on any particular rumors. >> what about yahoo!? >> twitch built something very special, as you all said. i think a lot of people took notice of that. >> do you think that google right now is more hamstrung because of antitrust concerns than they were even a year ago? >> that is hard to say. i think they have made a lot of acquisitions and i think corporate priorities are probably more hamstrung than any particular regulatory concern. where they want to spend their energy. >> how are they reacting to this acquisition? a lot of people are passionate about this network and whether it remains the same. and t's been very positive, that is something that they took great care and how this was gone about. we saw in the town hall, he said, we are keeping twitch independent.
the same office, the same team, the same policies with respect to broadcasters. i think that message has been received well. >> it was interesting to see complaints about google not being able to get the deal done. they have brought certain elements of that, i wonder if that will decline. >> i think they like it as an alternative to youtube and amazon is committed to keeping it that way. >> as you mentioned, amazon gaming studios. what is happening in the rest of amazon gaming studios? >> they are trying to build a gaming function. they're developing some of their own apps, they are hiring. it n't get the sense that is a huge corporate priority in the same level as video. obviously, this gives them another access to gaming. >> up next, what happens when bnb's guest refuses to
>> welcome back to the best of "bloomberg west." i'm emily chang. so what do you do when an airbnb rental goes horribly wrong? a rehabilitation therapist found out when she rented out her condo. the tenants refuse to leave after 30 days claiming california law allowed them to stay. she turned to airbnb for help, but had to hire an attorney to victim the squatters. airbnb told us our team has been working to do everything we can to provide support, we
regret how long it initially took us to get in touch with the hosts. the guests in this situation have been permanently banned from our site. what exactly happened? >> i can laugh now because there is a happy ending. it started out as a nightmare. i have a small condo i use as a vacation ebb rental down in palm springs. when i am not using it, i let families or friends use it out on airbnb. for people who want to have a short-term vacation down there. these individuals came through. they wanted a longer type of stay. they wanted a six-week stay. they said they were going to be working on a work project. they are videogame developers. it was two brothers. i thought, ok, six weeks. we can do that. and then long story short, they ended up paying for the first 30 days and then we were not able to process payment any
further. >> basically after 30 days they claimed squatters rights they were legally allowed to be there as tenants and if you wanted to get rid of them, you had to evict them. >> that is right. that's right. they reportedly came from austin, texas. i think they were taking advantage of a local jurisdiction which states that once a tenant is in a property, whether a short-term vacation rental once they are there 30 days, they have tenants rights. >> did you know about that in the first place? >> a lot of my critics, who are landlords or have properties say how did you not know this? this is how it is in the state of crea. -- california. i talked to others and they do more of this temporary vacation rental, they were surprised. they said that could happen to me. i had no idea.
>> they not only are predatory, they also apparently are accused of taking some money from kick starter and not starting the project that they were getting money for. i assume they are looking for the next scam. what do you do when you look at the people you might rent to and how might you do it? are you going to do it any more? >> that is a good question. i feel like this is a cautionary tale. i have learned a lot. i feel like a lot of other people are learning from it as well. i have learned that if someone is going to be a long-term rental, definitely 30 days, to do more vetting, the same way you would when you are renting to somebody for 12 months. >> so this got ugly. you gave us some text messages. you told them their powers going to be shut off. i hope you will check out peacefully today without the need for authorities to get involved. they write back saying they have spoken with their attorney and they're going to press charges for blackmail and damages caused by your
negligence and malicious misconduct. what did airbnb do about this? how long did it take for them to respond to you? >> they responded pretty quickly. the timeline was out of my hands once the tenants were there 30 days. it sounds like everything is taking a long time. really it is having to go through this legal process of unlawful detainer, which is the eviction process. >> you're not mad at airbnb? >> not at all. a lot of people think that i am. i love the service. i would still use it as a guest. i travel all over the place. >> do you think they should have given you more information about this 30 day issue? more warning? >> i think it is an emerging company. they are figuring it out. i know they have tightened up their customer service, their policies and procedures. i think going forward, maybe the next host that does a 30 day rental will get a pop-up warning. >> what did they do to help you? i read somewhere they hired a private investigation service to camp
outside the condo and somehow catch these guys as they were trying to go in and out. >> in the beginning, when we had realized they were not going to leave, their intention was to pay for 30 days and have free rent during the three to six-month eviction process. airbnb was trying to contact them through cell phone, e-mail, and they made whatever offer they could to draw them out. to get them out of there. like i said, once the 30 days were up -- >> they were not staking out the house? or you -- you're unsure? >> yeah, yeah. i'm unsure. it is a combination of things. my dad is my property manager. he lives locally. the neighbors were all like staking out. >> it was a posse basically. >> trying to monitor are they still there? are they gone?
>> may be airbnb did not hire professional investigators to monitor the property. >> i'm not sure. >> i wonder what this means for this business model. they have attracted a huge valuation. they have added over 550,000 rooms available, rivaling some of the biggest hotel chains. there is a presumption they can do this without trouble. what we see in new york city where there are buildings that the government might get involved, there are renters' laws in california, these are big issues. what do you think it means for the future of airbnb? is their growth limitless or is this going to happen more? >> it is an emerging industry. it will continue to grow. while airbnb might see this media explosion as a bad thing, i see it as probably good. for example, i have relatives who live in smaller markets or our baby boomer generation. what is airbnb? really, you can stay in apartment in paris? that is cool. they just had no idea.
we take for granted we live in a big metro city. everybody knows about airbnb. >> ultimately these guys left. they did not pay after 30 days. have you been compensated at all by airbnb? >> they did. >> how did that compensate you? >> they really stepped up to take care of my out-of-pocket expenses. >> did they pay you for missed rent? >> i'm not comfortable speaking about the details. the specifics. i did have to hire an attorney to take care of unlawful detainer. that is the way the law works. >> you are much nicer than most of -- >> what are you going to do with this condo? how do you feel about renting it out again? or even keeping it after this creepy experience? >> that is a great question. i was there a few days ago to do the reclaiming of the condo. when i had friends or family around, i felt fine. as soon as they left, i did feel that creepy sensation come
over me, like emotionally unsettled. i wanted to get out as soon as possible. >> so what are you going to do? >> but my advice, i have been given, wait one month. let everything settle and calm down. you are feeling better about things now than you were four weeks ago and then make a decision. do you want to keep renting it? do you want to put it on the market. one thing i will say in palm springs, like you mentioned, airbnb in new york or here, in palm springs, they are pretty organized and make it easy for people to pay taxes. you apply for a permit. it is totally legit to have a vacation condo. every month you write them a check. it is all good. maybe other markets will kind of adapt. > airbnb landlord cory tschogl. up next, can you predict an earthquake after the strongest
>> welcome back to the best of "bloomberg west" where we focus on innovation, technology and the future of business. i'm emily chang. for years scientists have been trying to better figure out when an earthquake is imminent helping people brace for the big one. quake technology is back on the forefront after northern california was hit with the strongest quake in a quarter century.
it injured more than 170 people, damaging dozens of homes and buildings in napa county. damage could hit $4 billion when you factor in all the business from closed business and wine country tourism. cory johnson spoke with the director of the labor tori and brad at the gee logical survey. he asked brad what stood out about this particular quate? >> it was a magnitude 6.2 earthquake on the fault system west of napa. we believe it is west of the napa fault. further evidence will give us information on whether it was on that fault. it was more of a surprise that it took so long for us to have an earthquake of this size. the shaking and the area of -- affected is very typical for a magnitude six earthquake.
the most vulnerable structures affected by the shaking -- a lot of gas and water lines broken, consistent with the level of shaking that was reported. >> we are showing footage of an earthquake 25 years ago, really not that far away. a lot of the damage done in the east bay. we were showing damage of the bay bridge and other places, which was so notorious where so many people were killed. terrific damage. you were there in berkeley. it seems like a fantasy we could have technology to predict what could happen before it happened. what do your tools tell us and what you know about your tools that you did not know before yesterday? >> what is important to point out is that we are not predicting the earthquake. we are predicting the shaking. the warning system we have been testing performed very well. it detects be very beginning of the earthquake. then they can put out an estimate of the shaking that is going to follow.
it can push out a few seconds, tens of seconds. best a scenario is about a minute's worth of warning to warn people prior to significant shaking. >> best case scenario is a minute of warning. what did we get yesterday? >> it was pushed out about five seconds after the origin time of the earthquake. napa could not have received a warning yesterday. however what we're trying to do now is get the necessary investment to build a full-blown public system. one of the things that would do would improve the instrumentation that we have and then napa could have had a warning. in berkeley, we had about 10 seconds worth of warning. as you get further away, oakland and san francisco, you have even more warning. what we're trying to do is sort of roll this out. we want this to be available to everybody. we have been testing it for a number of years. it is in really good shape. it is time to pull the trigger and provide warnings to people. >> who was holding back on that funding? it seems like a good thing to
know -- maybe. 10 seconds, can that really help? who can spend the money to make that help? >> the reason it helps, if you get a few seconds of warning, you can move to a safe zone. move under a table. move away from hazardous places such as the front of brick or masonry building so you do not have bricks falling on top of you. the rail system here in the bay area, they already get the warnings from our demonstration early warning system and they use them to automatically slow and stop the trains, thereby reducing the risk of damage to the trains, possible derailment, and injuries. urgeons can get the warnings so that eye surgeon can step back with the scalpel just seconds before the shaking starts. there are benefits. what is holding it up is just finding. we actually have legislation in california now as of last year that mandates we should build a public earthquake early warning system, but funding has not yet been identified.
what we need to do is encourage our legislators to put the necessary priority behind this. state of emergency has been declared following the event yesterday. in an emergency, we should implement the system. call your local senator. let's get this system built. that way we'll have a warning before the next earthquake. >> let me ask you about the economics here. dramatic pictures coming out of the wineries in napa and sonoma. we are lucky it was such a rural area where the grapes are probably the most affected. what kind of economic damage are we looking at here and how the ent might that hayward fault -- which we have heard that is so much more likely to go off? >> napa is not a completely rural area. napa is home to old structures, masonry structures primarily in their downtown area.
really it was these more vulnerable structures. many have been retrofit, so we saw portions of walls falling down rather than entire walls and buildings collapsing. that was the good news. moving forward in terms of what would happen if we move that earthquake closer to a denser urban population, most likely we would have more ruptures of gas lines, sewer lines, water lines in the affected area. generally our woodframe structures do very well in earthquakes, as do our structures built to the most recent building codes. >> richard allen, director to have berkeley size mo logical laboratory. well, snap chat could be the next start-up entering the $10 billion evaluation club. can it keep its place as a teen sensation? we talk to two young users next on the best of "bloomberg west."
>> welcome back to best of "bloomberg west." i'm emily chang. snap chat may soon be part of $10 billion evaluation club. they are said to be nearing a round by kleiner perkins that would value them three times what mark zuckerberg offered to pay for it last year. they have 33% of 18-34-year-olds using the frote-sharing app. what makes it so attractive to answer to and what does this addicted awed mean for the company's business? i spoke to two teen users. i started by asking ryan how many of his friends are still sing snap chat and for what?
>> the usage i'm seeing with snapchat with myself and my friend is changing a lot. it first exploded winter break of 2012, beginning of 2013. that is when it took over at my school. i see a lot more behavior of kids using stories and less direct snaps. but it is a way to share photos -- >> it is a way to share photos through the day and people can view those photos as a story rather than simply communicating one-on-one with one another. is that what you're saying? >> yes, some of the novelty of direct one-on-one has worn off, but we really like stories like what happened in that class today? what has been happening throughout your day? >> how about you? how are you using it and how are your friends using it? >> there is this interesting behavior that is developing. you see people not interacting as much. it is turning more into
something to use actively. i see a lot of my friends posting stories now and i don't get as many snaps as i saw before on a daily basis. this is something that i saw with facebook early on and then it suddenly became a consumption experience. something very similar is happening with snapchat. >> you see across the country about how teenagers and young people are using social networks, from facebook to twitter. what is your take on snapchat usage and what you've seen from your research? >> typically between about 8000 to 10,000 students in the u.s., and in the spring survey, the interest level in snapchat went from zero to about 4% as the primary social platform. it is still relatively small. we did ask if it was a primary platform. we didn't ask do you use it. it is the fastest growing with primary usage. there are about 100 million users right now.
you could argue -- whatsapp is about 600 million users. we have a long ways to go but the trend is in the right direction. >> what is the coolest social network out there? is it snapchat or something else? >> i think snapchat, instagram, and especially among girls there is this shot that's taking off. facebook is very utilitarian as i have talked about in the past. in terms of coolest, it is really up there between snapchat and instagram. i'm hearing about some others, but for the most part, everyone is using snapchat and instagram. and twitter is just occasional. >> interesting. how about you? >> it is interesting to see this shift away from public identities to more ephemeral networks such as snapchat, a couple of other things.
you see students getting somewhat disheartened by how much we really have to put ourselves out there. you will notice on facebook, every post become something everyone has to judge and see. it becomes a like contest. it moves to something more intimate, like snapchat, and others. >> people are becoming more concerned about being more public. we have to point out that snapchat doesn't even have a business model. there is no advertising on snapchat. they don't make money that we know of. right? is there something we don't know about the business story here? >> no, it's still just building users and getting big valuations. it is rumored to be a $10 billion. you could argue that is a bargain when you compare it to 18 billion dollars for whatsapp. but the business model has not een defined.
>> welcome back to the best of "bloomberg west." i'm emily chang. the emmy awards were held less than a week ago in l.a.. while they aired on nbc, host seth meyers had this ironic take. >> that is like network tv holding an awards show and giving all the trophies to cable and netflix. well, netflix was expected to be a big winner. its dreams were dashed in part by amc's "breaking bad" which took home five awards in its final season. we spoke with a c.e.o. of an independent multiplatform
studio. i asked if it matters netflix didn't take home a top prize. >> i think they were very present. they were mentioned, they were called out, they were featured. don't forget, a lot of people are going to go over to netflix to watch the back episodes of "breaking bad" that was so heavily featured during the elecast as well. >> thought it was almost not comedy when he said smch a video awards show that doesn't show music videos anymore. i look at this twitch video acquisition on the same day and i wonder what, if the future of content isn't about different distribution methods and different kinds of content and of hollywood might be left holding the bag. emmys i feel like the
focus on broadcast for comedy. with "modern family" and "big bang theory." maybe, twitch, they spent almost a billion dollars on it, that it will be the place for people to watch this new type of programming which is essentially sports for video games. >> it is interesting, shows on broadcast networks did well as well but there is such a set formula. julianna margulies won the award for best actress and reminded us that there are 22 episodes every year. what kind of freedom does developing it provide to content providers? what can they do that the broadcast networks cannot do to make the shows better? >> it really started with hbo and their ability to have
certain language and violence and other types of element in the programming that you could not have on broadcast. >> are you saying it is all about sex and violence? >> and language. also serialized programming. one of the benefits of netflix is their straight-to-series model allows the creators and producers to think about the show in its entirety and in some cases they are able to produce the entire show like a movie. they think about it as one full story. that benefits them. also this notion of the show is not going to be canceled gives a different time horizon to things. >> i wonder if netflix will learn and maybe amazon might be learning now how difficult the business is. they had such great success with their first two out-of-the-box, with -- >> it was not, they had some that did not work. >> with "house of cards" and with "orange is the new black."
when you don't see those awards show up, we don't know the results they get from the subscriber addition. could a couple of failures by netflix imperil the whole business or at least netflix's part in it? hbo helsea handler's show -- has movies, they have dramas, to have comedies. they are in all of the categories which is what part of what leads to such a strong representation of hbo and the emmys. i think you'll see that with netflix and also start to see with amazon. >> i wonder if netflix can sustain these hits. we are into the third season of "house of cards." the second season of "orange is the new black postcode and critics say that the later seasons have
lost some momentum. "game of thrones" has seemed to get stronger. >> if you look at the types of shows that they have in development, they just launched their first animated series that has been well received. this is really still maybe not the first inning. maybe that was last year. maybe this is the second inning for them. amazon is just getting into the game. i can tell you from the creative community in hollywood, people really want to work with netflix and that drives a lot of great product and development. people want to be there and they want to work with netflix. they will have access to the best shows out there along with hbo and the other premium cable networks. >> whether it is netflix, hbo, cbs, whatever, what is the impact of all of this spending and content in l.a. right now? >> it is a great time to be a studio and an owner of content
because there has never been more buyers for programming. the biggest scarcity is actually in the writing talent and in the show runners. to captain she's ships in these bigger and bigger budget series. the environment in hollywood right now is very positive because there are lots of places to sell shows and the udgets are going up. >> coming up -- he is not coach madden, an nfl player or an owner but he might be one of the most important people in football. introduce you to madden's ratings czar next on the best of "bloomberg west."
franchise blitzed its way to consoles around the world with authentic nfl jumbo trons, player spotlight montages and pregame and halftime shows, but as matt miller found out, the most important part of the game s simple data. >> for the last two decades, madden nfl has consistently ranked among the top videogames in america ringing in $4 billion for electronic arts. one man has helped fuel that success and it is not john madden. >> this is where i literally have data. every player has ever rating. >> meet donny moore, madden's ratings czar. with the 32 nfl teams, 74 players per team, plus 253
agents -- that is 2688 players which he designs a rating for up to 100 and 64 different categories. scores he creates using data from the game performance, team tats, and his own notes. like want to game to look an nfl game. i do want to put something in where you give a guy once bead, he is out there inching along. >> he did ratings on his old videogame is how we got his job at madden. >> you can spam this one button. i can probably find to the process so there is more gameplay. >> today, his ratings have helped ea make madden look so good, the franchise has sold over 100 million units. >> touchdown! >> but sometimes players disagree. >> i have a problem with
that. i know i have gotten better. they give me the same rating, that is so disrespectful. >> he is willing to take feedback from fans, gamers, coaches, and especially players about his ratings. >> there is a reason these guys are nfl players and stars. there was also a reason they are throwing 80% completion percentage and the reason why the texans went 2-14 despite having jj watt. we have tried to capture that. we cannot hand out lollipops to every player. >> not even to the highest rated player in the game. i can see it now. i'm going denver and peyton manning will come in. i'm super honored. i've never met the guy. he is a great guy. peyton, sorry this year you have 86 throwing power. you're 38 years old. i won't be the guy that tells peyton manning that. >> while everybody else will be focused on hanging out with pro
bowl quarterbacks and wide receivers, he only cares about making madden 15 a great videogame. >> bloomberg's very own matt miller. and that does it for this edition of the best of "bloomberg west." you can catch us monday through friday 10:00 a.m. and 3:00 p.m. pacific. we'll see you next weekend. ♪